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Archive for the ‘taxation’ Category

End Withholding

by coldwarrior ( 90 Comments › )
Filed under Economy, Open thread, taxation at April 19th, 2016 - 7:46 am

This is an idea that I have always backed, end federal and state and local withholding of taxes from your paycheck. Imagine the fallout!

 

Ban Tax Day

Today is Tax Day, when all of us collectively send our necessary tithe to the church of the almighty bureaucracy, peace be upon them. It’s also a day to consider one reform that would be very positive for the country: reversing the 1943 law making withholding mandatory. It is a dangerous, disruptive, and absolutely necessary step to end the current tax regime.

The overwhelming majority of Americans pay their taxes by having them extracted from their paychecks before they ever see the money. Operating under the fiction that the government is giving you money as opposed to returning what it has already taken is damaging to the psyche of the nation’s taxpayers. The primary argument against such a move – that millions of irresponsible Americans in the income tax-paying classes won’t save up enough to write a giant check to the government come April 15th – encourages a viewpoint of the role of government as an entity that must constantly protect us from ourselves.

Withholding was originally mandated as a wartime step, but its continuation since then disguises the property rights involved, essentially offers the government an interest free loan, and shields taxpayers from the ramifications of federal spending. The country would be better off if everyone experienced what entrepreneurs and business owners do: writing the most sizable checks every year to the government, and watching that hard-earned money walk out the door.

Taxes are terrible, and income taxes particularly terrible (from 1789 to 1913, the American system of taxation primarily relied on a system of import duties Alexander Hamilton designed in the space of a few months). Withholding is designed to make them seem less so. Ending the withholding mandate should be a bigger priority for those who want to reform the tax code. It increases the pain, but also the awareness of what causes this pain: the people in Washington who say you work and toil and earn bread, and I’ll eat it.

Time to Cut Govt

by coldwarrior ( 44 Comments › )
Filed under Economy, government, Open thread, Politics, taxation at September 9th, 2015 - 7:00 am
By Terence P. Jeffrey | September 8, 2015 | 11:14 AM EDT

(CNSNews.com) – Those employed by government in the United States in August of this year outnumbered those employed in the manufacturing sector by almost 1.8 to 1, according to data published by the Bureau of Labor Statistics.

There were 21,995,000 employed by federal, state and local government in the United States in August, according to BLS. By contrast, there were only 12,329,000 employed in the manufacturing sector.

The BLS has published seasonally-adjusted month-by-month employment numbers for both government and manufacturing going back to 1939. In the first 50 years of the 76-year span since then, manufacturing out-employed government. But in August 1989, government overtook manufacturing as a U.S. employer.

That month, government employed 17,989,000 and manufacturing employed 17,964,000.

Since then, government employment has increased 4,006,000 and manufacturing employment has declined 5,635,000.

According to the BLS data, seasonally-adjusted manufacturing employment in the United States peaked in June 1979, when it hit 19,553,000. Seasonally-adjusted government employment peaked in May 2010, when it hit 22,996,000.

(However, government employment in May and June of 2010 was unusually high because of temporary workers hired to help conduct the decennial census. In April 2010, there were 22,569,000 government employees in the United States. That climbed to the peak of 22,996,000 in May 2010, then dropped to 22,740,000 in June, and returned to 22,659,000 in July 2010.)

There were more Americans employed in manufacturing in 1941 in the months leading up to the Japanese attack on Pearl Harbor than are employed in manufacturing in the United States today, according to data published by the Bureau of Labor Statistics.

This August, according to BLS’s seasonally adjusted data, there were 12,329,000 employed by the manufacturing sector in the United States. But back in August 1941, there were 12,532,000 employed by the manufacturing sector. By December 1941, the month of the Pearl Harbor attack, employment in the U.S. manufacturing sector had risen to 12,876,000.

The 12,532,000 employed in manufacturing in August 1941 equaled 1 manufacturing worker for each 10.6 people in the overall population (which the Census Bureau estimated at  133,402,471 in July 1941). The 12,329,000 employed in manufacturing in August 2015 equaled 1 manufacturing worker for each 26.1 people in the overall population (which the Census Bureau estimated at 321,191,461 in July 2015).

The 4,821,000 people employed by government in August 1941 equaled 1 for each 27.7 people in the overall population of 133,402,471. The 21,995,000 employed by government in August 2015 equaled 1 for each 14.6 people in the overall population of 321,191,461.

Of the 21,995,000 employed by government in August, 2,738,000 worked for the federal government (including 596,500 who worked for the Postal Service), 5,092,000 worked for state governments, and 14,165,000 worked for local governments.

State and local government employees include large numbers of people employed in education. Of the 5,092,000 who worked for state governments in August, 2,446,300 (or 48 percent) worked in education. Of the 14,165,000 who worked for local governments, 7,852,500 (or 55.4 percent) worked in education.

GOP Wants More Money From the Middle Class

by coldwarrior ( 117 Comments › )
Filed under Economy, Open thread, taxation at July 29th, 2015 - 7:00 am

Yes, the GOP raising taxes. I have problems with that from both an economics level and from a moral level. First the Moral Level, the GOP should never be for raising taxes, period. But, they just love big government like the Democrats.

“The billions of dollars in lost sales tax is revenue badly needed by cash-strapped state and local governments to pay the salaries of essential workers such as police officers, firefighters, ambulance crews, and schoolteachers,” the NRF states.

Ummm….BULL! Cut spending! Failing that, try to raise taxes on the citizens in the state or local government. GO ahead, put THAT to a vote with your names on it state and local coward politicians.

Now for the economic reason against this tax:

The National Retail Federation (NRF) claims that states could collect an additional $25 billion in sales taxes annually if the legislation is passed, and argues that imposing the tax would help to promote business at traditional stores, create jobs, and provide tax revenue.

On-line purchases are already taxed at the same or higher level than those bought at a brick and mortar store. Here is how that works: A product is purchased by a person in PA from an on-line merchant in, let’s say, KY. (I just got an amazon package from Lexington so I will use that as an example). This retailer has a huge brick and mortar warehouse in KY that pays taxes on wages, energy, telecom/data, property, et cetera. Fine and dandy for KY but what about PA? They want taxes too.

Well, since this package is not part the tractor trailer load going from Walmart-distro to Walmart store, it is handled far more often by more people and creates taxes at a higher level. First, the package and goods are loaded into a box at Amazon, that act is taxed on the existence of the brick and mortar warehouse and workers involved. Then, it is handed off to a FedEx line haul driver in an 18-wheeler (gas/wage/tire/vehicle taxed) who drives it to the Hub in Louisville.

The Hub is enormous and generates a ton of tax revenue for KY/local. There the package is sorted and it goes to Columbus OH Hub where it is taxed en-route by deisel/truck/tire/wage taxes of the line-haul driver and his big rig. The sort Hub in Columbus generates a ton of tax revenue as well.

It then goes to PA, to the mini-hub in Pittsburgh where it is taxed again through wages/energy/ et cetera of the sort workers who place it on a delivery truck in that brick and mortar building. There it raises more tax revenue through gas/wages/vehicle et cetera taxes to get to my door. The delivery driver works and is paid to deliver, he then spends his money and is taxed on that. Without on-line sales his job does not exist. Without on-line sales, that mini-Hub has far fewer employees and PA/local gets far less tax money, so does everyone else down the line. When taxes are raised, the taxed action is penalized and occurs less often.

So, the jobs that the NRF and GOP want are part time retail jobs instead of full time transportation careers. That line-haul guy makes well over 50k a year not counting benefits, The mangers and support staff make pretty good coin too. The package-handlers range from 14-24 an hour and at UPS they get a great benefit package. A couple more clerks at Walmart gets you what in tax revenue?

Again the GOP tries to strangle the middle class. See, the thing is, they can’t send the transport jobs over to China….I suppose they could offer H1B visas to Pakistani taxi drivers to do line haul and package delivery….

Declining Middle Class Wages and Productivity

by coldwarrior ( 92 Comments › )
Filed under Academia, Economy, Open thread, Regulation, taxation at July 6th, 2015 - 6:00 am

Good Monday Morning. The High Priests of the Dismal Science have attempted to answer a nagging a question that I have had. Why are Middle Class wages wages stagnant or receding since 1995? They get a good portion of the equation that I had not thought of…Productivity. They do miss the gorilla in the room…ever increasing government regulations that stifle innovation and gains in productivity.

Have a read and chew on it for a while.

Whatever Happened To Those Middle Class Income Gains?

By Isabel Sawhill

This year’s Economic Report of the President has an interesting analysis of the sources of the slowdown in income gains among the middle class. Given all the attention given to the issue of growing inequality, especially between those at the top and the other 90 percent you might think that was the major economic problem facing the nation. But no, it turns out that the biggest source of the slowdown is the poor performance of productivity since 1995 compared to the earlier postwar period.

The question the President’s Council of Economic Advisers (CEA) asks is what if productivity growth from 1973 to 2013 had continued at the rate of the previous 25 years from 1948-1973? The answer is that the typical household would have had an additional $30,000 in income. (CEA report, p. 33)

The CEA goes on to ask parallel “what if” questions about income inequality and female labor force participation. How much better off would the typical middle class household be if income gains had been broadly shared after 1973 and female labor force participation had not levelled off after 1995? These changes produce smaller effects on middle class incomes of $9,000 and $3,000 respectively. However, all three factors combined can explain a whopping $50,000 in income foregone by our typical family. In other words, these families would have almost twice as much income if it hadn’t been for the decline in productivity growth, the rise in income inequality, and the levelling off of female participation rates.

The very large role of slower productivity growth is surprising. After all, we have seen an explosion in technology fed by the increasing power of computers. Smart phones, driverless cars, computer-assisted design and manufacturing, robots, drones, and the innovations they have made possible should have boosted productivity smartly. But as Nobel-prize winning economist Robert Solow once quipped, ” You can see the computer age everywhere but in the productivity statistics.” So what’s going on here?

According to the CEA, starting in 1973, labor productivity growth slowed dramatically to only 1.4 percent annually from its earlier pace of 2.8 percent from 1948-1973. (It has recovered somewhat over the last two decades but has not matched its earlier high levels.) They cite the exhaustion of pent-up innovations from World War II, reduced public investment, dislocations associated with a new international monetary system, and the oil shocks of the 1970s.

Other experts might add other factors to the list. Economist Robert Gordon believes that the technological breakthroughs of the late twentieth century cannot match earlier innovations such as those represented by electricity, cars, the telephone, and radio. It’s also possible that we have not yet seen the full effects of the computer revolution. My colleague, Barry Bosworth, has shown that a lot of productivity gains are occurring in the service sector and that it isn’t just capital deepening that is producing these gains. It is everything from better management to human capital investment and organizational innovation – all the things we cannot measure very well but which show up in the data as an unexplained residual.

In the meantime, the new technologies are contributing to growing income inequality. Because these technologies are replacing unskilled and even some medium-skilled jobs, we are left with the worst of both worlds – disappointing increases in productivity and declining opportunities for those without the education and skills to benefit from the new technologies.

The solution cannot be to slow down the pace of technology. It must be to encourage innovation, retrain workers, invest in the next generation, and help those dislocated by the changes. Yet we are not investing in research, in education, and in infrastructure in the same way we did in earlier decades. Taxes need to be reformed to provide greater simplicity, fairness, and growth. Policies such as paid leave, child care, and more flexible work places would encourage more second earners to join the labor force. Most innovation, to be sure, occurs in the private sector, but it has little incentive to invest as long as overall demand is constrained by policies that fail to mitigate financial instability or that are focused on short-term spending cuts in public investments combined with a longer-term explosion of consumption-oriented spending on the big entitlement programs. Until elected officials act to recreate these underpinnings of growth, any permanent improvements in middle class incomes are unlikely to be realized.

Isabel Sawhill is a senior fellow in Economic Studies at the Brookings Institution.  She co-directs the Budgeting for National Priorities Project as well as the Center on Children and Families.